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Tunisia Says Has No Intention of Requesting Foreign Debt Rescheduling

A man counts 10 Dinar banknotes depicting the country's first woman doctor, Tawhida Ben Cheikh, in Tunis, Tunisia. (Reuters)
A man counts 10 Dinar banknotes depicting the country's first woman doctor, Tawhida Ben Cheikh, in Tunis, Tunisia. (Reuters)
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Tunisia Says Has No Intention of Requesting Foreign Debt Rescheduling

A man counts 10 Dinar banknotes depicting the country's first woman doctor, Tawhida Ben Cheikh, in Tunis, Tunisia. (Reuters)
A man counts 10 Dinar banknotes depicting the country's first woman doctor, Tawhida Ben Cheikh, in Tunis, Tunisia. (Reuters)

Tunisia’s financial situation is critical, but the government has no intention of requesting a rescheduling of its foreign debt, Finance Minister Ali Kooli said in Wednesday. Tunisia, which has seen its debt burden rise and economy shrink by 8.8%, with the fiscal deficit at 11.4%, started talks with the International Monetary Fund to seek a package of financial assistance. Kooli told local Mosaique FM radio that negotiations were also under way with other potential lenders, including Qatar, to help finance the state budget. A sovereign default in Tunisia - though highly unlikely in the next 12 months - could cost the country’s banks up to $7.9 billion, S&P Global Ratings said last week. Tunisia’s 2021 budget forecasts borrowing needs at $7.2 billion, including about $5 billion in foreign loans. It puts debt repayments due this year at $5.8 billion including $1 billion in July and August.

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British Assets Gain, Mid-cap Stocks Lead after Labour Election Win

A view of the Palace of Westminster which houses Britain's parliament, during the general election, in London, Britain, July 5, 2024. REUTERS/Hannah McKay Purchase Licensing Rights
A view of the Palace of Westminster which houses Britain's parliament, during the general election, in London, Britain, July 5, 2024. REUTERS/Hannah McKay Purchase Licensing Rights
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British Assets Gain, Mid-cap Stocks Lead after Labour Election Win

A view of the Palace of Westminster which houses Britain's parliament, during the general election, in London, Britain, July 5, 2024. REUTERS/Hannah McKay Purchase Licensing Rights
A view of the Palace of Westminster which houses Britain's parliament, during the general election, in London, Britain, July 5, 2024. REUTERS/Hannah McKay Purchase Licensing Rights

British domestic-focussed mid-cap stocks were the biggest gainers on Friday after the centre-left Labour Party surged to a comprehensive win in a parliamentary election with blue chip stocks, government bond prices and the pound higher.

Hopes that the incoming government will provide a period of economic stability after an often tumultuous 14 years of Conservative Party rule sent the FTSE 250 midcap index (.FTMC), up as much as 1.8% in early trading to its highest since April 2022.

The blue chip FTSE 100 index (.FTSE), was last up 0.2% and the yield on 10-year British government bonds or gilts, dropped 3 basis points to 4.17%, marginally better than other European markets, Reuters reported.

Labour won a massive majority in the 650-seat parliament while Rishi Sunak's Conservatives suffered the worst defeat in the party's long history as voters punished them for a cost of living crisis, failing public services, and a series of scandals.

"A landslide victory provides the sort of clarity and stability that equity markets need in an increasingly volatile world," said Ben Ritchie, head of developed market equities at abrdn.

"If the new government gets this right, businesses with significant exposure to the UK economy should be the likely winners - a shot in the arm in particular for companies in the FTSE 250 and FTSE Small Cap".

British home builders stood out, with an index tracking their shares up 2.3%.

"We think the formation of a Labour-majority government will have a positive impact on housebuilders and construction materials," said Aruna Karunathilake, portfolio manager at Fidelity.

"We expect Labour to reinstate housebuilding targets and perhaps also fund investment in local planning departments... That should alleviate builders’ concerns about planning bottlenecks impeding growth in the medium term."

Analysts at Goldman Sachs said that while Labour's manifesto policies imply relatively limited changes to fiscal policy they would modestly boost demand in the near term.

As a result, they raised their forecasts for British GDP growth by 0.1 percentage points in each of 2025 and 2026.